COLUMBIA: Sells Mental Health Unit

      As part of a continuing effort to trim its size, Columbia/HCA Healthcare Corp. yesterday "announced an agreement to sell Value Behavioral Health, which manages behavioral health services, to FHC Health Systems of Norfolk, VA." According to the Nashville Banner, Columbia sold the unit for $230 million (Scribner, 1/29). Value Behavioral Health is one of four main operating units of Value Health Inc., which Columbia acquired in August of 1997. The company previously announced plans to divest three of the four business units, specifically Value Rx, a pharmacy benefit management company, and Value Health Sciences, an information technology company (release, 1/29). The firm plans to keep Community Care Network/MedView, a workers' compensation and group health network.

Financial Analysis
      Analysts claim Columbia received market value for the subsidiary, especially given the hospital chain's current legal and financial troubles. Sheryl Skolnick, an analyst at BancAmerica Robertson Stephens, said, "It's the first small step in the plan to bring Columbia back into perhaps a more manageable size." Columbia still may sell "as many as a third of its hospitals." Nancy Grden, a senior vice president of FHC, said the company intends to merge Value Behavioral Health into its existing services, "creating ... the nation's second-largest behavioral-health company, with projected 1998 revenue of more than $580 million" (Brooks, Wall Street Journal, 1/30).

Severance For Ex-Chief Rises
      In related news, the former head of Columbia will receive $12.4 million in severance pay, "25% more than previously reported," the St. Petersburg Times reports. Rick Scott, who left the company in July after federal investigators launched a massive probe into Columbia's billing practices, was originally promised a package totalling $10 million. The new estimate of Scott's severance deal was released yesterday by the Service Employees International Union, which "criticized Columbia for trying to hide the additional payments." However, Columbia spokesperson Jeff Prescott "characterized the bonuses as benefits any Columbia employee would receive if leaving the company" (Hundley, 1/30).